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The activities of the Organisation for Economic Co-operation and Development (OECD) in 2016-2017

Doc. 14401: collection of written amendments | Doc. 14401 | 09/10/2017 | Final version

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ADraft Resolution

1The Parliamentary Assembly of the Council of Europe, enlarged to include the delegations of national parliaments of the Organisation for Economic Co-operation and Development (OECD) member States which are not members of the Council of Europe, as well as a delegation of the European Parliament, takes note of the concurring analysis of the OECD and the International Monetary Fund of the current economic environment and projections for 2018. It notes that the recovery in the global economy is continuing, but slowly and slightly faster in the OECD area than in the eurozone. It recognises that the recovery remains fragile and that any negative shocks could trigger a new downturn.
2The enlarged Assembly agrees with the OECD about the need to tackle this low growth and believes that demand must now be stimulated, but more through fiscal policy than through monetary policy. It urges OECD member States to rapidly seize the opportunity of the exceptionally low level of interest rates to revive public investment, provided that four conditions are met:
2.1the revival in investment is concerted and well co-ordinated across levels of government;
2.2it affects sectors that benefit growth directly such as those recommended by the OECD in its report Going for Growth 2017;

In the draft resolution, at the end of paragraph 2.2, insert the following words: ", and is targeted with due regard to their international obligations, in particular the Paris Agreement;"

Explanatory note

Developed countries subsidise the fossil fuel industry by paying the cost of externalities (air pollution and climate change) and through preferential treatment, tax breaks or direct subsidies. A fiscal stimulus package may stimulate short-term growth at the expense of long-term sustainable development.

2.3it is budget neutral and therefore does not deepen public deficits;
2.4it goes hand in hand with the structural reforms recommended in Going for Growth 2017, in particular on the various labour markets.

In the draft resolution, after paragraph 2.4, insert the following paragraph:

"The enlarged Assembly underlines the importance of balanced multilateral trade relations for enhancing prosperity for all and securing fundamental rights, sustainability, social peace and fully-functioning democracy. It encourages the OECD to pursue its research on the impact of evolving trade and investment protection arrangements on fundamental rights, democracy and the rule of law. The enlarged Assembly also calls on the OECD to evaluate the implications for development in the light of Brexit and President Trump’s rejection of the Paris Agreement on climate change."

Explanatory note

Multilateral trade (and investment) is central to the healthy balance of private commercial goals and public interests, both in the short and long term. The OECD’s research on the interaction between trade and fundamental rights, democracy and the rule of law should help politicians make informed policy choices.

In the draft resolution, after paragraph 2.4, insert the following paragraph:

"Whilst supporting the need for quantitative and dynamic growth, the enlarged Assembly urges member States to adopt a more comprehensive approach to development by fostering quality, sustainable and inclusive growth that brings long-term benefits to society and preserves the planet’s resources. It asks the OECD to explore the link between fossil fuel subsidies and renewables in achieving sustainable development, in addition to problems of market abuse."

Explanatory note

The currently prevalent development model relies on quantitative growth that often neglects sustainability. Greater emphasis on sustainable development is necessary to optimise growth and ensure a fairer distribution of the benefits of growth.

3The enlarged Assembly stresses that multilateralism, provided that it is genuinely inclusive and provides scope for States to take action on an equal footing, is the only means of achieving tangible results in the fight against international tax evasion and avoidance, in particular thanks to a greater tax transparency, against base erosion and profit shifting (BEPS) and against aggressive tax planning.
4In these respects, the enlarged Assembly congratulates the OECD and the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) on the results achieved in the area of exchange of information on request (EOIR) following the first round of peer reviews. It calls on:the
4.1OECD and Council of Europe member States deemed “partially compliant” by their peers to take the necessary corrective measures;
4.2the Council of Europe member States which have not yet undergone comprehensive reviews to do so during the second round of reviews from 2016 to 2020;
4.3the Council of Europe member States which do not take part in EOIR (namely Bosnia and Herzegovina, Montenegro and Serbia) to join the process.
5The enlarged Assembly welcomes the use of EOIR as a model for the automatic exchange of financial account information (AEOI) and the use of the latter in some actions of the BEPS Project. It is pleased to note that the Common Reporting Standard, which determines the scope of and arrangements for the operation of AEOI, covers a sufficiently broad range of data to effectively combat international tax evasion and avoidance. It encourages the 101 members of the Global Forum which have undertaken to activate it before the end of 2018 to ensure that they have the systems in place and the necessary human resources for processing the information which their tax administrations will receive. In this regard, it welcomes the initiative of the OECD's Forum on Tax Administration to pool their financial resources to procure a Common Transmission System (CTS) to facilitate AEOI. It recommends that those Council of Europe member States which have not yet done so accede to the Convention on Mutual Administrative Assistance in Tax Matters (ETS No. 127) drawn up jointly by the OECD and the Council of Europe, which is the legal basis recommended for the introduction of AEOI.
6With regard to the BEPS Project, the enlarged Assembly reaffirms its commitment to multinational enterprises (MNEs) reporting their profits where economic activities take place and value is created. The concern to avoid the double taxation of MNEs must not result in non-taxation that leads to losses in revenue of $100-$240 billion for governments every year, according to the OECD.
7The enlarged Assembly welcomes the speed with which the OECD was able to implement the 15 BEPS actions it had recommended, including the four minimum standards for which the peer reviews have now started. It encourages OECD and Council of Europe member States to sign and ratify as quickly as possible the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting and the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports so as to allow the automatic exchange of the relevant information from 2018.
8Drawing on the work of the OECD Parliamentary Group on Tax, the enlarged Assembly calls on the OECD to give in-depth consideration, within the BEPS project, to ways of strengthening efforts to combat aggressive tax planning which ultimately leads to tax avoidance harmful to States. The exercise of fiscal sovereignty must not lead to aggressive tax planning, and practices of this kind are per se to be condemned.
9The enlarged Assembly is pleased to note that both the Global Forum and the Inclusive Framework on BEPS include more than a dozen developing countries and that the Global Forum has adapted its technical assistance to the latter in connection with EOIR. It proposes to publicise the Global Forum and Inclusive Framework ratings by including updates on them in the biennial report on the activities of the OECD.
10In addition, the enlarged Assembly also calls on the Parliamentary Assembly of the Council of Europe to give in-depth consideration to the possibility and advisability of increasing the effectiveness of the OECD’s recommendations, for instance by amending the Convention on Mutual Administrative Assistance in Tax Matters (ETS No. 127) in order to enable an international tax co-ordinating body to impose sanctions.
11The enlarged Assembly takes note of the link between the continuing increase in income and wealth inequalities over the past 30 years and the reduction in potential growth. It agrees with the OECD that the reduction in opportunities afforded to poorer households because of increasing inequalities prevents them from investing properly in their human capital. It calls on its members:
11.1not to focus solely on growth while forgetting how it is distributed;

In the draft resolution, at the end of paragraph 11.1, insert the following words: ", notably by fighting the development of new forms of poverty associated with precarious, low-paid work and imposed part-time contracts".

Explanatory note

Precarious work and underemployment do not guarantee a decent income and they give rise to new forms of poverty. They put a strain on the state budget due to increased demand for social benefits. Public authorities must ensure minimum income security through work.

11.2to take steps to improve human capital that are not confined solely to the 10% of households with the lowest incomes but are aimed at the 40% of households in that position;
11.3to concentrate on education and skills measures which foster social mobility within societies, in particular: early childcare, policies for families with school-age children, reducing inequality in educational outcomes, upgrading skills to avoid obsolescence and aligning skills supply with business demands for skills among those leaving the education system, as advocated by the OECD.

In the draft resolution, paragraph 11.3, replace the words "to concentrate on education and skills measures" with the following words: "to invest in education, skills, training, youth employment and social services".

Explanatory note

States should not only promise support to the most disadvantaged households, but also financially enable equal opportunities for those who can least afford them. ‘Social services’ is a more appropriate term to describe early childcare and other pro-family policies highlighted in this paragraph.

In the draft resolution, paragraph 11.3, replace the words "upgrading skills" with the following words: "lifelong upgrading of skills in an inclusive manner".

Explanatory note

Lifelong training is necessary to help people break the trap of long-term unemployment and obsolescence at all stages of life.

In the draft resolution, paragraph 11.3, after the words “those leaving the education system”, insert the following words: ", in particular among those leaving the education system early".

Explanatory note

Mismatches between business demands and existing skills pool are particularly high among those affected by early school dropouts, according to the OECD’s research. These penalise workers’ employability all their life.

In the draft resolution, after paragraph 11.3, insert the following paragraph:

"To submit trade agreements, in particular investment chapters, to in-depth scrutiny to ensure that they will make a notable impact on growth with benefits spread across society rather than concentrated in certain groups."

Explanatory note

Trade agreements are an important part of multilateral efforts to pursue growth. It is not clear whether such agreements, as they are currently framed, will stimulate tangible growth. Moreover, such growth might not be distributed evenly throughout society. Trade agreements are not taking these uncertainties sufficiently into account.

12The enlarged Assembly invites the OECD to continue its work on the relationship between wealth inequality and growth and on the existence of thresholds or indicators on inequality which would give States an idea of the level of “sustainability” of such inequality in relation to growth.

In the draft resolution, at the end of paragraph 12, insert the following sentence: "It also calls on the OECD to investigate the impact of trade and investment agreements on inequality."

Explanatory note

Having established that inequality hampers growth, further analysis of the policy prescriptions for tackling inequality is required.

13The enlarged Assembly believes that, as regards youth employment, investing in education and skills today will generate future employment and subsequent growth. It calls on its members to combat the increase in the number of young people not in education, employment or training (NEETs) who are economically vulnerable, in accordance with the Group of 20 (G20)’s goal of reducing the share of young people most exposed to the risk of permanent exclusion from the labour market to 15% by 2025.